Bitnotar is a Notary Service for witnessing the existance of a certain document. This service allows to "testify" this at a certain point in time. Later on, the existance can be proven based on the document (or the "hashsum" of the document) and an estimated (+/- 1 hour max.) time-stamp is returned. Most notably, this doesn't rely on a trusted thrid party.
Technically, the idea is to use the block-chain of Bitcoin as a distributed time-stamp protocol. This works, because each new block in this block-chain is created about every 10 minutes. Each block references the predecessor and inside each block, every transaction is referenced.
The process of testifying the existance of a document is done by sending a very small amount of Bitcoins to the public Bitcoin address derived from the hashsum of the document itself.
By disclosing the procedure of how this derivation is done (basically, the SHA-256 or some other hash function), everyone is able to verify this by means of a simple lookup in the block-chain.
The essence of the actual "proof" is the amount of computation needed to create the block-chain. I.e. if you discover, that the derived public Bitcoin address associated with a given document is N blocks deep in the block-chain, N blocks have been mined since then. Mining each block happens at a speed of about one every 10 minutes, where this process is self adjusting and (until now) has never been broken or hacked.
The given application has (or should have) these two basic functions:
- Testify: Derive the public Bitcoin address and initiate a Bitcoin transaction.
- Verify: Derive the public Bitcoin address and look it up at a service like blockchain.info or blockexplorer. Return the associated time-stamp (and maybe also look up the time-stamps of the surrounding blocks to verify the time-stamp). Additionally, local lookup mechanisms could be implemented.